book tv. c-span, where history unfolds daily. 1970 nine, c-span was created as a public service by america's cable television companies. and is brought to you today by your cable or satellite provider. announcer: a house hearing looked at measures to strengthen economic sanctions against north korea and the countries that assist them in laundering money. also discussed new sanctions imposed by the un security council. this hearing by of house financial services subcommittee is two hours. >> all members will have five legislative days in which to submit materials

>> this hearing is entitled a legislative proposal to impede north korea's i recognize myselfe minutes to give an opening statement. today's hearing will examine legislation that would impose a secondary legislations on foreign banks whose business support north korea's regime. by encompassing virtually all of north korea's economic activity, these measures would represent the top list financial sanctions yet. this means going after coal, petroleum, textiles and minerals . and north korean laborers abroad. the bill would incentivize greater compliance with u.s. sanctions by -- where certain countries with lax enforcement go to seek assistance. the bill's countries on notice.

the proposed legislation has been informed by the committee's ongoing work on north korea as well as the u.n. panel of --erts evaluation of existing sanctions effectiveness. north korea's six tests on september 3 coupled with repeated launching of ballistic missiles undermines -- underlines that more must be done. legislative drafting we will be looking at laid out a choice. foreign banks can either do is get that benefits north korea, or they can do business with the united states. they cannot do both. as many of us here are aware, this is a similar approach taken to the one in 2010 against iran, which helped compel the ayatollah negotiate. while there are differences of opinion over how successful those negotiations were, there is consensus that in the absence

of secondary sanctions affecting banks, it would've been less incentivized to engage in talks. a focus on banks is important given how north korea has even aided sanctions in the past. as one man testified before the subcommittee in july, the north koreans have moved much of their training activity offshore, using third party brokers. the specter of financial sanctions may concentrate the mind of foreign banks so that the entities identified have fewer options to carry out transactions and mask north korean involvement. this bill would expand the scope of our sanctions to encompass those engaged in conventional trade with the north. given north korea's hostility, broader and our efforts in this

way is essential. to strongeronse sanctions has been cited as a concern. the country accounts for an 90% of north korea's trade. some have argued that harsher now may damage cooperated of efforts with chinese leaders to curb north korea's weapons program. i would cement those critics should be more sensitive to a quarter century of failed efforts to rein in pyongyang. there comes a time where caution becomes a euphemism for self-delusion. as this subcommittee learned in july, if china is not part of the solution to north korea, it is part of the problem. chinese officials have full and short on in forcing u.s. itselfns that beijing

has signed on. as the u.n. security council talks following the nuclear tests, it is still unclear if china is committed to mean finally to meaningfully attacking north korea threats. kim jong-un's eagerness may not be inconsistent with chinese interests. as all the talk of china rival to u.s. power, we are asked to believe that his hands are tied when it comes to a small, economically dependent state next-door. if chinese officials hands are ties -- are tied, we should proceed with secondary sanctions so that their banks and assist international efforts to cut off north korea's access to finance. if china could do more than it has, secondary sanctions may finally inspire it to do so.

thank you to our witnesses for appearing today. i look forward to your testimony. the chernow recognizes gwen moore from wisconsin. >> thank you. absence of ourhe full committee, i want to share some thoughts regarding today's hearing. i want to thank our witnesses for joining us to discuss the legislative proposal and at expanding u.s. sanctions against north korea and pressuring the international community to enforce those restrictions. the situation in north korea is the most urgent and dangerous threat to security. it is one that grows more dangerous as north korea aggressively pursues the capacity to extend its nuclear reach. there are no good options for

dealing with north korea. most experts agree a preemptive strike on north korea would be reckless. options, i like the idea of pressing china to lean more heavily on north korea. i like the idea of tougher sanctions. but we should not confuse either of those things with a coherent strategy. we should be clear up front about our objectives and what we expect sanctions can accomplish. any ratcheting up of sanctions must be coupled with aggressive diplomatic engagement with the united states in a framework negotiationstail with north korea and allies and china. this would require a policymaking capacity and coordination across the u.s. government as well as skills policy coordination with our allies. it concerns me that just as this

crisis is accelerating, a diplomatic capability, which opens channels for crisis communications are diminished. not only are u.s. a better serve , thes. ambassador ships president has yet to nominate a permanent secretary of state. the legislative proposal before us today rightly recognizes the need to exert massive and immediate pressure on the north korean regime. china in these efforts. such a powerful approach toward sanctions. but has the capacity to reverberate across the global economy. we must also allow for a careful calibration. we look forward to the witnesses

views on how the u.s. can most effectively use leverage to contain the alarming danger north korea presents. the chernow recognizes a gentleman from washington. for conveningll this hearing. korea'sng to north provocations will require a variety of tools. andlful diplomacy nonmilitary sanctions. in the financial services committee, we have jurisdiction only over sanctions. it is important we keep the broader picture in mind as we work to perfect the draft forward today. even with perfect compliance, it is difficult to stop any country from pursuing a course of action

that it views as vital to its survival. challenges are greater when dealing with north korea, a regime that relies on force to stay in power. who have demonstrated in difference in the incredible suffering of its own people. sanctions can make further north korean advances slower and more costly, giving more time for other tools to work there it i look forward to hearing from our witnesses about how this proposed draft fits into a larger strategy. my constituents in puget sound who include service members are counting on us to respond to this crisis in a responsible manner. so i are our allies.

japan has enjoyed peace and prosperity in large part because of the credibility of u.s. security guarantees any broad commitment to the region. we cannot afford to fail. we have to get this right. i am hopeful that with steady american leadership working in a bipartisan manner, we will get this right. the gentleman yields back. because of the significance of the issues under consideration in this hearing, and the importance of the north korean threat to our homeland, a number of members from the full committee have expressed interest in participation in today's subcommittee hearing. i ask for unanimous consent that members on the full committee may join in this hearing. without objection, that is ordered.

of alcome the testimony .anel of witnesses first the founder and president of the institute of international security. he is written numerous assessments on the secret weapons program throughout the world. he has published assessments in technical policy journals. including scientific american, washington quarterly, and arms control today. mr. albright has co-authored for books. -- four books. pedaling parol, how the secret nuclear trade arms america's enemies. a senior staff scientist at the federation of american sinuses -- sciences. he spent more than 17 years in the u.s. government.

recently, he was a foreign policy fellow with senator rubio. -- mr. ruggiero has served in the treasury department. prior to joining treasury, mr. ruggiero spent over 13 years in various capacities at the state department. advisor to the u.s. delegation to the 2005 rounds of the six party talks in beijing and participated in u.s. north korea meetings following a primaryfication as money-laundering concern. he is also served as an intelligence analyst.

clearer specializes in japanese affairs. are informed by his 20 years of service at the central intelligence agency, and the intelligence agency. what the cia deputy division for korea, responsible for the analysis of political, and leadership issues for the president of the united states and other policy makers. in 1990 three and 1994, he was the chief of the korea branch which analyzed military developments during a nuclear crisis with north korea. rosenberg is a senior fellow at the center for a new american security. in this capacity, she publishes

and speaks on the national security and foreign policy implications. .n the use of sanctions from may 2009 to september 2013, ms. rosenberg served as a senior advisor to the assistant ,ecretary for financial crimes and then to the under secretary for terrorism and financial intelligence. in these roles she helped develop and implement financial and energy sanctions. she also helped to formulate anti-laundering policies and to oversee enforcement activities. each of you will be recognized for five minutes, given oral presentation of your testimony. your statements will be made part of the record. mr. albright, you are recognized for five minutes. >> thank you for the opportunity to testify today.

3 testorea's september is the largest in terms of exposure -- explosive yield. years northast few korea has embarked on an intensive nuclear weapons testing campaign that has included the construction. tens of ballistic missile launches. it's apparent goal is to have tens of nuclear weapons with warheads of many varieties made into ballistic missiles with ranges stretching to intercontinental distances. few doubt that north korea can missiles that can strike our allies japan and south korea. there is more skepticism that north korea is yet able to deal a nuclear warhead to an american city, it is making rapid progress to that goal. i continue to believe that north

korea can be peacefully deep-nook realized -- denuclearuized there is little choice but to assert more pressure. un security council resolution passed on monday is an important step in that direction. is to farm priority more effectively isolate north korea from regional and from -- and international financial systems. --ot of countries are not in or disregarding them. punitive measures are needed to encourage compliance. additional u.s. legislation that supports that goal is useful. north korea appears to target entities and persons engaging in violation of security council

sanctions intends of countries with weak or nonexistent control systems for purple it -- for proliferation. although a range of remedies are needed to fix the performance in general with many of these countries, the creation of punitive measures may be an effective means to accelerate more compliant behavior in the short term. a wide range of countries where entities see north korea as a ,.ick way to make money north koreae with is in a different category. as the chairman pointed out, north korea has gone offshore quite successfully to acquire those goods. they don't just acquire them in the country such as china, they

are able to get those goods from the united states, europe, and japan, by operating in china and exploding china's week export control. although china is improving laws, beijing has not done an adequate job of enforcing laws and sanctions against illegal exports to north korea. i provided several examples in my testimony. china remains north korea's supply condit for its nuclear weapons program. one of the priorities is to change that. the trump administration's efforts to sanction chinese and russian owned companies and individuals that significantly support the weapons programs is a positive step. unless china shows improvements in ending trade with north korea, united states should go further and sanctioned major chinese and russian banks and

companies for any illicit north korean dealings. they have gotten away for far too long and faced to few consequences for turning a blind eye to the sanction busting activities of their citizens and those of north korea in using their economies for nefarious purposes. north korea has a diplomatic path on its isolation. any such negotiations would need to repair past mistakes were north korea was able to evade inspections and continue expanding its nuclear programs. an agreement would also need to allow unprecedented inspections and access, allowing a full accounting for the program as part of the denuclearization process. although this process seems unlikely in the short term, trajectory,korea's it is important to keep this

available as a matter of u.s. policy in case increased sanctions cannot convince north korea to negotiate an earnest. the trump administration should make clear that regime change is not its goal. particularly if the goal is to seek cooperation from china, that becomes more important. gentleman's time has expired. , you are recognized for five minutes. >> thank you for the opportunity to address you today on this important issue. often u.s. policy toward north korea gets stuck in a cycle where north korean provocation is met with a strong american rhetoric or an increase in sanctions. the pattern is repeated over and over. if we don't break this cycle, the kim regime can continue distracting the united states with provocations. we must ensure we advance our

goal of the neutralizing -- denuclearizing north korea. we have seen this movie before, and it's ending is not encouraging. north korea has made it clear it has no interest in denuclearization. to the extent they are interested in negotiations it is only trying to extract concessions. before they subcommittee in july, i noted that u.s. sanctions did not have a serious impact because they had insufficiently targeted enough of pyongyang's business. fortunately, this appears to be changing. the trump administration has started to sanction north

korea's business partners. the u.s. has sanctioned 43 of whom 86% operate outside north korea. done, recentis not u.s. actions against north korea revealed three methods pyongyang uses for financing prohibited activities. in slide one, the first method starts with north korean revenue in china following the sale of commodities brokered by chinese firms and individuals. the payment moves through a north korean bank. from there moving left to right. from there the funds moved to a that accessesy u.s. banks. this only happens because the u.s. banks are checked into processing the north korean transactions. it's is how payment is made for the original item in the u.s. dollars. this method is important to highlight with recent report

that chinese have cut off north korean accounts. the method relies on a ledger system between north korea and china, where the chinese firms and individuals hold these bank accounts. slide to, please. ase.lide two, ple chinese entity one on the left moneyf the slide,, i was ney.wes mo the entities pay each other, giving the difficult the of moving money along the chinese north korean border. the third method was used by russian companies to use u.s. dollars to ship gas. would not process this transaction between sanctioned parties. to avoid the scrutiny, the front equities were created in

singapore to obscure the nature $7the transaction, allowing million in payments for this transfer. all three methods show that north korean suppliers referred -- prefer u.s. dollar payments. this is why it is crucial for the trump administration to issue fines against the chinese banks are facilitating. matching the successful u.s. policy as the chairman said, to pressure european financial institutions that were transactions.ran to be clear, nongovernmental organizations in washington can find these transactions, i am confident the largest banks in china with significant manpower can find them to. chinese banks need to do more or face severe consequences. in the meantime it is important to remember there are other political considerations at

play. pyongyang is trying to decouple united states from our closest allies, south korea and japan. is not a suicidal attack on the u.s. homeland, but using that threat to bolster pyongyang's effort to reunify the korean peninsula and intimidate our japanese allies. koreaons focused on north activities has the best chance of success. thank you for giving me the chance to testify, and i look forward to your questions. ms. rosenberg, you are recognized for five minutes. >> thank you. i appreciate the time to testify. much stronger pressure on the regime to of them in proliferation activities and cease provocation. until sanctions should be part of the strategy along with

posture and projection, company did bike that the medic engagement to move north korea toward civility and denuclearization. we need to tighten pressure on north korea, along with complement three centuries from united nations. for some observers, the lack of sanctions and enforcement is an immediate indication that the current sanction from work is inadequate. united states should make secondary sanctions mandatory to force other countries to comply with sanctions. while current sanctions are already very aggressive, to apply pressure on north korea and its international and, i support efforts of this committee to determine how secondary sanctions will be deployed to enhance pressure. we must forget that secondary andtions require delicacy

their application. they may be counterproductive if they are so aggressive or incendiary that partners become , or tradecooperative war. ultimately, avoiding pitfalls in using secondary sanctions is the responsibly of the u.s. administration, the body that it limits and the forces sanctions. we must also give the administration adequate flexibility. even within the framework of we musty sanctions, also manage the consequences for the united states and its partners. in addition to sanctions, u.s. policy leaders must deploy another form of economic statecraft to target north korea, pushing for rigorous, risk-based approaches to global banks, for global banks to detail finance.

only large u.s. banks and some pursueuropean and u.s. -- leaving all other global banks vulnerable to be used by north korea for other poor the freighters -- proliferators. this means they often take a mechanical approach to proliferation of finance in the form of checking customers, or transactions against entities sanctioned by the u.n. or international governments, sometimes but not always including the u.s. this gives opportunities for proliferators to use front companies to get around compliance controls outside of major institutions. standards for bodies in finance, the task force endorses an approach along the lines of checking customers

against sanctions lists. instead of a risk-based evaluation of suspected proliferation conduct or proliferation typology. this limited approach is inadequate. we need stronger leadership from united states to clarify that global banks must take a more holistic risk-based approach to forening an investigation proliferation in finance, and there must be stronger exchange around known proliferation entities. in my written testimony, i outlined several points in response to your legislative discussion draft. to briefly summarize a few items, i support your tough approach on secondary sanctions, and encouraged the inclusion of meaningful waiver provisions to manage unintended sequences. also, i urge you to consider ways to provide additional financial support for the treasury and state departments, and the u.s. intelligence community to expand the group of experts crafting and enforcing u.s. sanctions, and offering

technical assistance to foreign countries related to enforcement . finally,, should mandate new extending to foreign branches, subsidiaries, and correspondence related to proliferation finance, and facilitate greater private information sharing on this topic to enhance global .ompliance, and to impede thank you for the opportunity to testify, and i look forward to answering any questions you may have. >> thank you. mr. klinger, you are organized for five minutes. distant wished members of the panel, is an honor to be asked to speak before you. although north korean missile programs are indigenous, the regime requires access to components and hard currency. pyongyang maintains covert access to the banking system through global array that overseas networks and shell companies.

most of north korea's transactions that assist the rizzi the regime continue to be in u.s. dollars. -- a the challenge is closer examination reveals several encouraging characteristics. north korea uses a limited number of trusted individuals to run its covert networks. although the shell companies can be changed, the individuals responsible for establishing and managing them have remained for years. north korean agents leave behind a digital trail, making them vulnerable to targeted sanctions. while china accounts for 90% of north korean trade, the entire trading system consists of 5000 companies. those firms are centralized ofng a smaller number

large-scale trading firm so that the top 10 importers of north korean goods in china could 30% of the market. those trading firms themselves are controlled by a smaller number of individuals. the north korean network in decentralized, limited, and vulnerable. targeting a small number of strategic choke points can have a disproportionate ripple affect impacting multiple networks across multiple countries. law enforcement action could reduce components in the network to change roots, bank accounts, and procedures to less effective means. even legitimate businesses will become more fearful and getting entangled in illicit activity. these efforts reduce north korea's foreign revenue sources, increase strains on the regime, and generate internal pressure on the regime. sanctions enforcement must be flexible, innovative, and adaptive to the changing tactics of the target. as north korea altered its modus

, when north korea shifted to chinese brokers, u.s. and agency should have included them on sanctions lists. the u.s. must go beyond sanctions and diplomacy to include a full-court press diplomatically and isolate north korea from the international community, and introduce tremors into the regime's stability. usedinistrations have sanctions as a diplomatic response rather than a law enforcement measure defending the u.s. financial system. the u.s. should target any entities suspected of aiding or abetting north korean arms development, criminal activities, money laundering. the u.s. should also and de facto chinese immunity from u.s. law. beijing has not paid a price for turning a blind eye to north

korean illicit activity occurring on chinese soil. washington has had -- has --ered the north korea sanctions and policy enhancement act mandates secondary sanctions on third country banks that violate sanctions and u.s. law. u.s. should penalize all penalties including chinese financial businesses that trade with those on the sanctions tot, export prohibited items north korean entities. washington should enforce fines on a commensurate level to the $12 billion levied on european banks for money laundering for iran.

in conclusion, the most pragmatic u.s. policy is a comprehensive integrated strategy using all the instruments of international power to increase pressure and risk bonds to pyongyang's increased defiance. to highlight and condemn pyongyang's crimes against humanity. while leaving the door open for diplomatic efforts. sanctions require time and the political will to maintain them in order to work. the policy of a slope python constriction rather than a rapid cobra strike. thank you for the privilege of appearing before you. >> thank you for your testimony. the chair recognizes five minutes of questioning. earlier this month, russian claimedt vladimir putin that the north koreans would prefer to eat grass then give up

nuclear weapons. how would you respond to those that claim that north korea can always weather sanctions? that sanctions are not effective in providing substance and meaning to our diplomacy? and that the kim regime will never care if it's economy suffers in order for him to advance his weapons? i ask all of you to briefly respond to that question. >> sanctions can have a big impact on north korea. they are not implemented, so there is a lot of room to press north korea to change its behavior. it is extremely valuable tool. the purpose of sanctions, i would like to see north korea eat its nuclear weapons. sanctions should have a cost. that can be done. in north korea it is more

vulnerable because it is surrounded by big powers. this is not like india and pakistan, or even iran. north korea is a weak state that is surrounded by powerful neighbors. even russia does not like its behavior. >> when you answer this question could you address the issue that the north koreans have been creative in using their country to mask their illicit transactions. as you answer the question, could you address our draft bill , and whether you think that banks in third countries, above all china, possess the capacity to identify these brokers, mittleman, and front companies -- these brokers, middlemen, and front companies. >> the ones that are working

with north korean proliferation entity that was designated by the u.n. in 2009, that the u.s. sanctioned twice in the last couple months. ande had his own companies limiting sanctions, they would do better. 2005 andlso go back to my experience at that time. we were effective at targeting north korea's activities. there is a difference here, because north korea is not stupid enough to concentrate all their financial activities in one bank. in terms of being creative, people criticize sanctions because it is a game of wha ck-a-mole. they are not invisible. the largest banks in the world can find them. that's the part i would highlight. if we are not having chinese

banks and u.s. banks looking for these activities, that is the problem. that is a serious problem here. >> i would add that china has a variety of strong interests in ensuring there is no money laundering occurring in their own copy economy -- in their own economy. that china has the capability to go after and investigate and take action on north korean money laundering. if china, a country with extensive and sophisticated control, and that has taken measures including installing facial recognition cameras at atm's in order to manage the flow of currency outside of china, then they can certainly do more to recognize these

trusted agents of the north korean government that changed their names and change their legal entities in order to launch her money to china. >> mr. klinger, if you can answer the question and how north korea has evaded sanctions in the past, specifically address your quote that every un security council resolution isn't incremental step forward. we get what china allows us to have. if the security council resolutions are in criminal, can we afford to rely only on those, or do we need to do more in congress? thatwould tell mr. putin sanctions have several objections. they impose pain on those who violate our laws. tougherin place proliferation or counter proliferation measures than we hope with all the other instruments of international

power to get north korea to abide by resolutions and laws. i believe in doing the right thing even if it is difficult, rather than throwing up our hands in despair. i believe in rolling up our sleeves and getting to work. >> time has expired. i will have to yield to the german from illinois at this point. >> thank you, mr. chairman. thank you to our witnesses. the financial sanctions we're talking about seem to have two strategic roles. the first is the cut off access to the technical components necessary for the development of what it looks like to be many dozens of deliverable nuclear weapons in the next several years. , it is the rough estimate is been widely reported there is the ability to make components inside north korea at this point, so what is the rough amount, what is the dollar

figure, ballpark figure of the dollar figure for how much they have to purchase outside their country to execute that program that everyone is worried about? when we watch their business of acquiring equipment, and we focus on the nuclear weapons program, they are buying things in millions of dollars, and they are buying a lot. what they pay -- >> it is a small prep -- it is a small fraction of the billion dollars? >> yes. see they have no shortage of cash to buy things for the nuclear program, it is not huge amounts of money. >> in terms of trying to understand what leaks we can tolerate in a sanctions regime

designed to shut down their it would havem, to be prohibitively tight. ,> even in the case of iran where they were putting in more deceptive practices in their procurements, companies, governments are good at detecting these things. we get a good read out on a lot of what north korea has acquired over the years. we use that strategically to understand their program, and where it is going, but also tactically you get a lot of information about the networks that you can act on. the problem has been that china is not cooperating. if a german company in china is getting help from its own government to try to defeat the north korean efforts, the chinese government is not doing very much. they are the ones who should be doing the most. the goal, rather than to cut

off money, is to increase information and our shaming ability? identify the goods, you can move to cut off the financing. they have got to pay for it. these things build upon each other. agree that going after the money is the way to hurt the most. are known to be past masters at shuffling around money in black markets. if you look at crypto currencies , they are a norm is compared to the fund transfers we are talking about. part of the question, the second strategic goal is to put pressure on the general economy. fuel, luxury goods, things like that, and the strategic goal there seems to be to put fear in the leadership in north korea of some sort of

general unrest. if thatorry is that comes to fruition, it will be interpreted as a decapitating strike that may trigger a to retaliateplan against our allies, which are hard to defend against. i was wondering if you have any thoughts on that, the risk we are heading for. i would add to that, in addition to the goals you outlined, a primary goal for congress would be mandating sanctions. also putting pressure on foreign entered country enablers of north korea, either a proliferation program, going

after china in particular. or private institutions, banks, and companies to encourage or compelled their greater activity to advance the goals. one of the functions of the putsure tactics is to greater pressure on the regime stability. we want to make kim jong-un fearful of regime stability if he continues down the path of define the international community. i disagree with those who , orcate a decapitation limited military strikes. i think we are in a long-term game. strategy. a cold war we are seeking to undermine. >> the gentleman's time has

expired. the john mann from texas, mr. williams. chairman.ou mr. thank you to the witnesses. north korea continues to destabilize southeast asia and threaten this safety of the united states. the aggression shown by kim jong-un is increasing. as the united states develops a strategy to further curb the threat posed by the dprk, we must consider the others who are enabling their actions. actions to cutr off governments that prop him up. nations that are unwilling to cut ties with the rogue regimes that encourage mass destruction and threaten global security should not be in business with united states of america. mr. klinger, can you explain the decision that china is faced with when determining what to do states? with the united

is this geopolitical issue for there areis there severe -- entitiesd focus on the that are acting against the you and resolutions as well as international and u.s. law. the money laundering and other criminal acts, that are engaging in facilitating the north korean nuclear and missile program, i would focus on a law enforcement basis of going after those and individuals that are violating resolutions. falls, what will be the fate of the north korean people who have been exposed to

decades of propaganda and oppression? do you believe they can adapt to a new way of life, or a new form of governance? answer is wee don't know. they have been isolated for decades. they had been fed a daily diet of propaganda. increasingly, information from the outside world is getting in. whether they believe the propaganda is a question we debate amongst ourselves. i think it varies by individual. reasons likef the with east germans, we are trying to get information into the regime, as much as we can to have the citizens question the propaganda that the government gives them. >> thank you. mr. albright, can you discuss the level of nuclear cooperation that north korea has with other

countries, and who outside of china do you believe to be the greatest concern? considerablea had ,ooperation with syria essentially building a nuclear reactor that was bombed by israel in 2007 prior to its operation. after that it has been harder to track any nuclear cooperation. there are suspicions something could happen between north korea and iran. that is active, but as far as i know nothing substantial has been found. during the six party talks, north korea committed not to engage in proliferation. obviously, we don't believe that is true, but i think it is on inice that if it does engage cooperation, it will be incredibly significant, and can trigger across a red line that

would be hard for the united states not to take very akoni and action, and -- to take very draconian action. , can you discuss the way united states targets money laundering activity related to dprk? can we identify illicit transactions and stop them? i think what we are seeing now, in particular with china, is the trump administration is using it combination of the justice department tools and treasury department tools. late maycasions since they have used those tools to target money launderers, in particular those who are trying to do by natural transactions to the united states, whether it is designations, requests for asset

calledure, or what is damming warns -- damning warrens. we need more of that. many nongovernmental associations exposing these networks. when you do u.s. government putting the right amount of resources, like we had on iran on this problem. the gentleman's time has expired. mr. chairman, i wanted commend you on this bill draft. i look forward to cosponsoring it. i have been doing this for 20 years. i want to applaud you for getting these witnesses here. i have heard them often. they have enlightened me.

for 20 years i have sat on the foreign affairs committee, and administration after admin ministration expert has come forward. we have gone from no nuclear weapon in north korea to .ydrogen bombs, and near icbms what is less well known is that we have seen a 50% increase in the real gdp of north korea, even while this regime is subject to sanctions. then we are told we're going to change this with unprecedented , which just means a little bit more than what we have been doing before. hydrogen weapons, icbms, 50% gdp growth, some say our policy has been a failure. viewed in another way, our policy has been a success for the political class in washington. we have been able to tell americans we had to doing all we can to protect them, and don't blame us, and at the same time

we have avoided doing anything that is difficult for the political class in washington. beyondst of be to move company sanctions to country sanctions. these gentlemen and the lady are experts in how we can tell china to go after this bank instead of tapping, but as long as china once north korea to be relatively stable, they will find a bank that will did -- that will do business with them. sanctions, country sanctions would be difficult for the political class in washington. advocates are big companies who would wonder whether there is risk to their supply chain. the other thing we have not done because because it is political is set realistic objectives. we say we are going to get them to give up their nuclear weapons

. kim jong-un is not going to give up his nuclear weapons. if he thought his regime was falling, he would use them. i want to commend you, mr. chairman, for the realistic objective you have on this bill. on verifiable limits that we might achieve. thatave done something those who spend the time on foreign affairs have been unwilling to do. you have taken a constructive step. mr. albright, kim jong on, if esop -- if he thought his regime was going down, but he shrugged his shoulders and go to the hague for trial? was a conflict, he would use his weapons. if he is knocked off by his

military generals, he may not use them. >> we can hope that they are more sane and peaceful than he is. >> they would be moving to survive, and want to accommodate the neighbors. pull -- i will point out saddam's people did not do that to him. many of the people around saddam and qaddafi would wind up worse than their leader. how has the north korean economy grown by 50%? >> the best answer is because they have been allowed to do that by a broad culture of noncompliance and nonenforcement

with sanctions. >> even if there were no sanctions, 50% economic growth, i want to put this in context, their economy is only $15 billion today. they use as much oil in the whole country is 150 gas stations. i have a hundred 50 gas stations on ventura boulevard. we are dealing with relatively small moles. >> the german yields back. gentleman yields back. -- i think each of you today. as you may know, i offered an thatment that was adopted

would prohibit the defense department from doing business with chinese entities that provide material support to north korea's cyber attacks. mr. ruggiero, in your opinion, is my amendment an appropriate response? >> on the amendment, in terms of that suggests that firms need to do better at identifying north korea transactions and companies, i think an amendment like that, and the bill that is on the

floor, or proposed by the committee, the main goal is diligence, and making sure that the dod do not do transactions with companies in china. in ciber, i would point out there has been some focus on north korean cyber. north korea is looking at bitcoin and other technologies to avoid sanctions, including trying to steal bitcoin from south korea. that is a different turn on their list of activities. >> hubley these fines are do youve deterrent -- believe these fines are a detective deterrent? think dt agreed to that

fine. they were caught doing the transaction. there areso point out north korean front companies that are caught up. >> do you think it will be a deterrent? if you are a senior official in a chinese bank, you have to be worried right now. zte?at other entities like a lot of the north korean programs, as i said before our indigenous. they need technology and components. >> any specific ones you have in mind? i don't know any specific ones. whereuld have a provision you can do business with north korea, or you can have access to the u.s. financial system. as a companies -- that is a

decision companies have to make. >> how can we better compel the chinese government to work with us on this issue? to separate law enforcement from diplomacy. we can content -- we can can continue on the path to implement you and sanctions, but we don't need chinese permission to enforce u.s. law. we make clear to them that we are not going to negotiate away our law enforcement. incrementally better you and resolutions, that we should not incrementally enforce u.s. law. rosenberg, could you elaborate on data sharing tween the private and public sector? can type of enhancement assist our efforts full --

assist our efforts? ideas thate a couple would be good opportunities for congress to take action on increasing data sharing among financial institutions. instructing the administration to offer new guidance and adaptation in order to facilitate more information sharing between financial institutions within u.s. jurisdiction. that would transfer to -- protectingis be done privacy? >> i believe it is feasible. it is not an easy -- it is not a walk in the park. there are privacy considerations.

done ineen successfully the sharing of terrorism financing. >> thank you. i appreciate your comments. >> the chair recognizes the gentleman from arkansas. i think the chairman for this hearing, and i appreciate the expertise of our witnesses. sherman's. compliments of their long-standing work on this issue, and appreciate your service for our government in office and out. we have been dealing with this for three decades, four presidencies.

ever going to get serious ,bout sanctions on north korea and why weren't these great sanctions proposed to president clinton or president bush were president obama? united states did too little for too long, and they are now thinking about getting serious about it. establishing north korea as a national security vital interest. that confused me. tv in 2002 when president bush declared north korea as part of the axis of evil. why northed about korea is so low on your chart, .r. ruggiero why are we just now getting serious about north korea?

what are your top three reasons we have not sanctioned north korea for 20 years? it has not been a foreign-policy priority. that is the bottom line. whether you look at getting rid of sanctions, or getting money five --o thousand giving money back in 2005. they built aover reactor in syria, or whether it is looking at this congress approving, insisting that north korea be evaluated as a primary money-laundering concern. when you look at that detailed information provided last year, you see that financial transactions back to 2009. you start to ask the question, what happened -- what have we been doing the last 10 years?

it has not been up foreign-policy priority. when i hear people suggest the new administration has policy the same as the prior one, that is not true. they have gone after china six times. a have gone after russia. they have moved north korea off the chart. there is a lot more to do. the question is, how are we going to get from this point to denuclearization? determiningtates is what we need, and it should be moved to an extreme level so north korea will start to feel it. >> i appreciate that. i appreciate the work ambassador haley is doing at the united nations. i think the chairman for bringing this bill from the forests -- for bringing this bill before us.

is that he united nation sanction? is that an american sanction? how does one do that in a legal matter? >> i think the u.n. sanctions use the phrase, even a new resolution uses the phrase "reasonable grounds", that some material is being transferred. i believe just as we did with pull together countries that say we interpret that clause to now say there are reasonable grounds that every shipment that north korea puts back and forth is a violation, -- that it is subject to

that would be a key element. just like the proliferation security initiative in the 2000 s. the chair recognizes the gentle man from ohio, mr. davidson. thank you to our guests. i have enjoyed your dialogue on the questions. perhaps we are shooting for too little of a goal. it seems our goal is a .on-nuclear peninsula in korea except that most of the parties do not want that outcome. it makes it a hard outcome to attain. , but we mayesire it be one of the few. have south korea's back, they are ok they don't have one themselves. japan does not want to.

this might stop there. it might make sense to set a higher goal, which should have been our goal since 1950, which state that does not have the united states defending the korean peninsula. what would it take to do that? it would take peace. it would take the conditions that led to the united states minimizing our presence in germany, where the east and west have reconciled. we have not moved down a path that pursues that. we have moved down a path that continues to escalate, and to make seeking nuclear weapons somewhat rational for a really irrational guy, generation after generation. with that in mind, perhaps why we have failed, along with things my colleague highlighted,

i feel we have a good track record in iran to build on. we have good track records and other situations using economic action to pursue a peaceful and -- to our desired end state. i guess there are concerns about trade with china. they are a key part of our supply chain. they are also a vital part of north korea's supply chain. when you look at the risk on supply chain management, we need to get to the point where we use ,ll the levers of u.s. power just like banks are forced to know your customer, the rest of the world needs to be forced to know your supplier. part of that will be hard in china. to enforce these good sanctions, better highlighted in the policy enhancement act, you may take

that. mr. klinger, you highlighted a number of those things in your testimony. we can takeat down to a small manufacturing company in china that is aligned with north korea, and they are moody -- they are moving products, services, and cash back and steps cant tangible we take to close off that pipeline? >> there are a number of things. having the political will to do it. i have been surprised over the years that the u.s. has hesitated to enforce its own laws on the same degree with north korea that we have done to a did -- to a greater degree with other countries. think naivete, wishful thinking, and political will.

we have gone down the diplomatic path a number of times. we have tried freezes before, and they did not work. we need to give greater resources to the intelligence community and state department and treasury department, and unleash the law enforcement. if you talk to officials in the government, they will say for years they have had a list of chinese and north korea violators, and they are allowed to take out 10 or so when there is a provocation, and may have to put the rest back in the drawer. i think it is time to empty the drawer. yes, mr. albright. these companies are becoming multinational. some come to the united states. what u.s. companies should be doing, and have not been doing is gain assurance from those chinese companies in writing that they will control the end use of their products.

it is in u.s. law that it should be applied much broader to start to push these companies. if they want to do business, they have to meet ethical and legal >> thank you. my time has expired. my conclusion is that we have an existing law in place. we don't really need new laws. we need to enforce existing laws . i look forward to feedback to help bridge that gap. i yield lifetime. >> thank you. the gentlelady from utah, ms. love. rep. love:: in the wake of the six nuclear tests, the proposal that would have frozen the north cana's leaders access -- you comment on the desirability of expanding the prohibition in our draft legislation to include

the members of north korean government and the dprk's workers party? we can start with you, mr. albright. mr. albright: i think it is useful to do. mr. ruggiero: i think there is already an executive order on that. i would go in a different direction. i would say that issue on leadership assets is identification on those assets. anything that can be done to andntivize those folks banks in europe in particular that might have information on leadership assets, i think that would be more beneficial. ms. rosenberg: i would agree. it is not only a law enforcement matter, but also being able to share that among other banks. there's never an instance where money laundering only exists in

institution. that would allow a variety of banks to understand the network and stop it. >> i would absolutely go after assets.ip last year, the u.s. finally designated kim jong-un and nine others for human rights violations. is an executive order january 2015 that gives us a 30 to sanction any member of the north korean government and prefer being a member of the north korean government. we can and should go after not only kim jong-un, but the other leaders. samelove: among the questions, mr. klingner, can you discuss the potential for north korea to assist other countries such as iran, to advance ballistic missiles? mr. klingner: as mr. albright was saying before, there has clearly been named missile relationship between north korea

and iran. iranirst three missiles paraded were made in north korea, they were just given a local paint job. the information is difficult to get. we know north korea was engaged in nuclear cooperation with pakistan and libya and others, but the information with cooperation with iran is much more difficult to get, particularly outside of government. i think there clearly is a relationship between the two countries, but i think it is hard to get unclassified information on it. albright, here is my connection between the two. i am concerned that if we continue to just try and -- we want to be as diplomatic as possible. we want to work with people who are willing to work with us. however, we see north korea incredibly defiant. we see them go test after test.

to me, i don't know if you have the same concerns, but it seems as if they are not a threat by themselves, that the proliferation of these activities can support nuclear ambitions for other foreign regimes. are you concerned about that at all? certainly.t: you have to be concerned with north korea. they like to sell things of value. their nuclear assets are of increasing value. you have to worry about that a great deal. that has to be part of what is watched for. and the message is delivered to north korea, i don't think it's a coincidence that the director of the cia was on oxygen is the other day raising this issue -- fox news the other day raising this issue. it's important to send a signal that if north korea crosses that line and is willing to sell weapon grade uranium or plutonium weapons, we would probably respond militarily to take out that regime.

it may be a bluff, but it is important that line has to be maintained, and i would say and forced, and north korea would get the message. they don't want to commit suicide. rep. love: one more question. given beijing's reluctance to take a harder line with north korea, what argument should be theght in order to convince chinese that pressuring the dictators of china is in their self-interest? china wants to be a responsible member of the international community. a lot of these arguments on applying sanctions on chinese companies are the same arguments were used in the 1980's against germany, who was at that point arming pakistan, iraq, pakistan -- libya, iran, and probably some others with how to make nuclear weapons. china wants to be responsible, and it should act that way. rep. love: thank you very much. my time is expires.

>> the chernow recognizes the gentleman from indiana, mr. hollingsworth. goodhollingsworth: morning. as everyone has reiterated, this is an important and timely topic, and something we need to take with grave importance. one of the things i wanted to talk about was making sure we have partners that are engaged in this as well, and russia comes to mind. my concern has continued to be that they don't have an interest in enforcing sanctions at the same level that we do, and a willingness to combat this issue . the more the united states continues to be, i will use the were distracted -- and i don't use that lately -- distracted by north korea, the better off they may see themselves. can you talk more about what they can do to engender more cooperation on behalf of russia to purchase a paid in whatever

solution -- participate in whatever solution? ms. rosenberg: thank you for the question. a good strategy is one that we have discussed here primarily with regard to china, but in this case applying it to russia, using sanctions or other law enforcement actions to go after specific russian entities acting in violation of sink -- sanctions, or in violation of you and sanctions. rep. hollingsworth: how would the russians feeble to shield those companies from the effects? ms. rosenberg: it's possible they could try and do that, such as rhetorically, like the dismissive rhetorical jesters putin.adimir nevertheless, those companies want to use u.s. dollars. they would not be able to u.s. sanctions prevent them from doing that. any russian company or bank

that was just a and the good graces of the united states, they would be very reluctant to ,acilitate going forward notwithstanding their political top cover at home. rep. hollingsworth: you believe these can be efficacious, with regards to the political sector in russia as well? ms. rosenberg: we do. we see that in other instances not related to russia. for instance, in a run, there was broad consensus about the need for strong sanctions, going after companies was a way for them to get out far in front of their own governments on their willingness to abide by sanctions. the secondgsworth: question i have, i'm just a business guy at heart, what does success look like? when do we know that this has been successful, and what is the next step after that?

obviously, we want to, to the greatest extent possible, either slow down or stop the technical progress with icbms or nuclear or hydrogen weapons, but what does it look like after? we put in place tight sanctions and just continued them forever, or could you tell us what phase two would look like? i shouldght: emphasize, we have not talked the point that much, of this is to have meaningful negotiations. success,d be a sign of if north korea, without accepting benefits -- that is one new change in this administration compared to others -- the benefits, after the concrete actions, not a reward for negotiation. but if there are meaningful negotiations toward denuclearization, creating limits on their nuclear program, you see inspections.

inspectors have not gone outside -- and also if there is movement toward a peace treaty, that is also something important to work into this whole process. i think on that side, we know when we will see it. with the new criteria being used that are built on avoiding the mistakes of the past, i think we will know it when we see it. rep. hollingsworth -- with mostro: i agree of that. i would caution that we want to get out of the trap of negotiations for negotiations' sake. i think a freeze is not as valuable as some people think it is. the next step is a demonstrated. by north korea of its commitment to denuclearization, which would flip negotiations on its head. it used to be that we freeze,

then we dragged them to denuclearization. we need to put that on its head. we also recognize this might not --the regime willing to that to do that. if sanctions can't get them there, perhaps we need to get them there. >> your second point notwithstanding, i agree. point, making sure we don't just freeze here at the precipice of icbm, at the precipice of launching nuclear tech.k -- we have seen their willingness to renege before. i don't want to be a month away from the icbm. with that, i will yield back. >> thank you. the gentleman's time has expired. i want to recognize the gentlelady from st. louis, missouri. ms. wagner. you, mr.er: thank chairman, for hosting this timely hearing.

in august, i traveled to korea and japan and china dialogue with our allies in the peninsula. i had the opportunity to visit not only the dmz, but also dan , where i watched chinese trucks loaded with goods drive across the china korea friendship bridge into north korea. 70% of north korea's trade passes over that bridge. it was a stark reminder that the united states should prioritize secondary sanctions against the chinese companies and banks that sustain the regime. uggiero,ro -- mr. rood you wrote that north korea is the fourth most sanctioned country in the world. given the recent september security council resolution, how would you rank north korea

today, given that certain chinese investments and trade efforts are grandfathered in or exempted from the august and september you and sanctions -- u.n. sanctions, how effective do you think the sanctions would be? mr. ruggiero: i would point out that february 2016 was number eight. when i testified before the subcommittee in mid-july, it was number five. it is moving up the ranks, but has a long way to go, unfortunately. the way i like to look at is very similar to iran. 1929.0, we had resolution that was the foundation. sanctions passed by this congress and implemented by the prior administration were what put iran over the edge and lead it back to the negotiating table. we need that here. what we need is the u.s. sanctions. i would say it is concerning to

,ear the treasury secretary say "we are going to wait and see if the chinese implement the u.n. resolution." i think that's the wrong approach. we should be moving forward right now u.s. sanctions against chinese banks. we should not give china a veto. they should not have a veto over u.s. sanctions. agree.gner: i mr. klingner, barring a threat kimhe regime's survival, will never come to the negotiating table in good faith, i believe. we must change his financial calculus, as we discussed, which is why comprehensive secondary sanctions are so critical, i believe. i appreciated your statement on increasing inspections and introduction of north korean shipping. would you support mandatory secondary sanctions on port that

don't implement required inspections? i agree we must pay much more attention to this. i agree.ner: that is something the congress has been looking at, particularly if a port doesn't implement required sanctions, then measures cannot transit that poor and entered the u.s. waters for six months or so. one thing we have been hampered by in the u.n. resolutions is that all of them have been passed with what is called chapter seven article 41 authority, where we are not allowed to board a ship on the high seas, even if it is suspected of carrying nuclear contraband. so we have been advocating 42, which would give the authority to coast guard or law enforcement agencies to intercept and board -- rep. wagner: don't the recent packages allow us to board now, and others, on the high seas in terms of member states?

they have new tools, don't they? mr. klingner: i believe that was included in the original u.s. draft, but i think it was tossed overboard that did not make it in the final resolution. think it's a i reasonable ground standard, but it goes back to what mr. klingner is saying. consent in order to board the ship. rep. wagner: quickly here, mr. albright, in my view, north korea already has nuclear weapons. for my constituents, without access to classified information, it would be helpful if you could say how many weapons they may have and where they may be. mr. albright: we estimate they 30 at the end of 2016. we have no idea where they are.

i think the u.s. government estimates, i believe, are higher than that, but i think i have worked on this problem since 1985, and i have visited north korea a couple of times, and met their nuclear people. i think they are not giants technologically, and they encounter problems. that estimate tends to be lower than the u.s. government one, but is still a significant number. >> the gentlelady's time has expired. reppo wagner thank you -- >> i think the members are interested in a second round of if we can have the indulgences of the witnesses for a brief second round, we would appreciate that. i recognize myself for an additional five minutes of questioning. >just to revisit this issue of effectiveness of sanctions, you

heard the comments and questions of my colleague from california, mr. sherman, on that point. over the last several decades, there has been a lower priority, but there have been sanctions nonetheless on north korea, and yet we have seen a continuous belligerence, continuous development and acceleration of the nuclear program and the capabilities of the kim regime, particularly in recent years. my question, to anyone who wants to answer is, what is different about, if anything, about the foreign policy, the sanctions efforts, of the current administration, particularly the efforts of ambassador haley and the u.n. sanctions package she has been able to secure? we will start with that question, with mr. albright. mr. albright: i would like to go

back. u.s. policy has been to try to stop north korea acquiring goods. in the 1980's and 1990's, a lot of effort was made to kick them out of europe. their missions would go to companies and buy goods for the nuclear programs. they were kicked out. what was not anticipated is that they would move to china and set and by the same goods from european companies, get them to china, and send them by truck to the nuclear program. the problem has been -- and this is i would say the most important change to me, in this administration -- they are willing to risk trade conflict with china to solve this problem. shop,north korea set up the administration has not been able to do that until this one. as you answer the question, you have read the draft bill presented to you. could you comment on that bill,

and the extent to which it would ratchet up this pressure through secondary sanctions on the regime? approach,ro: from my we tend to get ourselves in this publication-response cycle. we have done that over the last 10 years.i agree with dr. albright. this administration has gone after china and russia to an extent that we haven't seen before.it needs to be sustained. i think the past, we convinced ourselves -- i personally have written, i have delivered, i have been in the same room. commit china a list, we ourselves, we put forward a tough way, and the chinese just hand wave, and we are ok with that. in terms of the legislation, i noted earlier the due diligence component, but beyond the various legislations that are out there, it is oversight. i think the key aspect here is

ensuring that these bills that eventually become law are actually implemented. there are many companies that are still not sanctions and should be subject to sanctions, even from the sanctions last year. >> could i just ask mr. klingner, on the heels of that answer, revisiting your comment the the importance of distinction between the u.n. incremental enforcement, and the u.n. sanctions, the two rounds of sanctions, and congress and the administration of the u.s. acting independently, how much more pressure with the legislation being proposed or u.s. independent additional action on secondary sanctions, how much of a difference would that make above and beyond the most recent round of you and sanctions? mr. klingner: as i said, the un's sanctions, each one is

incrementally better than the last. pessimistic, but the u.n. actions are critical. it is one we could do ourselves. we don't need permission from china. to be honest, i don't see why we are having a debate on whether to implement secondary sanctions. they are enforcing u.s. law. why should anyone be against enforcing our law to the full degree? thelegislation as well as oversight through which congress can hold the executive branch's feet to the fire to push them to fully enforce the laws either on the books, or could be on the books, the three-man actions the obama administration did last year was because they were pressured by the enhancement act. >> the difference here -- it is the things you mentioned, but it is also an issue of lax enforcement. enforcement is very critical. the panel of experts points to countries,ment from

so these secondary sanctions are absolutely critical in applying the additional peaceful pressure. ms. rosenberg, conclude on that point. the secondary sanctions you think would make a difference from previous efforts? ms. rosenberg: i do. i think we have seen that happen last year and this year. i think it would do more. one of the challenges about the new security measures passed this week is that they are not self reinforcing, and they rely on a reduction or a cap on production of petroleum. that is something that you and would have to do accounting on. with inaccurate or unavailable data with countries and member states not feeding the data to the u.n. there's a high likelihood we are not going to see compliance with this, even as a matter of arithmetic and slow and for

reporting. what that means is when the u.s. can impose its secondary sanctions to call out and highlight where foreign countries are not undertaking their requirements as u.n. member states, it would have a major and significant effect in bringing them where they are willing to cooperate to do so. >> my time has expired. i recognize the gentleman from arkansas, mr. hill. thank you, chairman. we also learned in previous testimony that in the standing committee in the bureau in china, two out of the seven members are from provinces that abut north korea. the presumption is that one gets on the standing committee of that zero by getting goals established on economic development, etc. i'm interested in your view on china's seriousness here, and do you think they can recognize what secretary tillerson has laid out quite clearly, that we

don't have aims for u.s. presence or western presence at their border. theirthat comment on bureau, in your view, do you anticipate china would be more helpful after they had their significant party congress that i believe is to be held in october? just talk about the politics in china about them understanding the united states' sincerity in ending this issue once and for all. mr. klingner: i think china is as helpful as it needs to be to prevent the u.s. from taking further action on our own. the message that has been given to china but needs to be given more forcefully is, you don't want a crisis on your border, but your lack of pressure on north korea is only encouraging pyongyang to go down that path you don't like.

it is also inducing the u.s. and its allies to take defensive measures that china doesn't like, but we are being pushed into it by your outline. you can pay -- you are out -- your ally. you can pay me now or pay me later. rep. hill: is your assessment different after they complete the party congress? mr. klingner: i have become pretty cynical about north korea and china. they talk well, the implement to four months, then they back off. mr. ruggiero: i agree 100%. i think anyone who believes china would be more cooperative after the party congress is falling into beijing's trap again. goodbody said they had a summit at mar-a-lago, the chinese are on board. they are not on board.

unfortunately, i can do that over the last 10 years. that has happened time and time again. to your question on how do we measure seriousness, i think that is a good question. the way i measure it is the chinese should not be closing north korean accounts, they should close their own nationalist accounts, they ng stoppingn dando those trucks. they should be in those countries -- companies, stopping sanctions. they should be in those banks doing the same thing. until they do that, they are not serious. mr. albright: i agree. i can't read them. i don't know chinese politics. i can't really say. we doe with mr. ruggiero, need signs of seriousness. i can give an example of a thetry, wanted to inspect -- a country with vital trade arrangements with china. they were not allowed in.

they were literally blocked by the private company running the customs storage area. there are signs we are looking for. federaleen involved in prosecutions of chinese nationals, at least one national, prosecuted successfully here, his colleagues were never prosecuted in china. i think these signs are critical. rep. hill: ms. rosenberg, enforcement we know, and upping who is the bigger trading partner of china, the u.s. or north korea? ms. rosenberg: there is no question there. to refer back to the question at the beginning, what has changed, one thing i will say in ad propos of what you say, the willingness of the current u.s. president to offer tough

rhetoric on north korea, including raising the possibility of whether trade can and should occur between the u.s. and china, even if that is an adjustment to send a really strong signal, that is different and has clearly been a huge wake-up call. obviously, the devil is in the details, how do you do implementation? to be frank, when we see china comply with other sanctions frameworks or iran, russia even, others, when they had gotten with the program, it has never looked like them saying to u.s. diplomats who sit there and pass them intelligence, we got this, we are with you. it comes under a different guise. i would welcome china coming forward with its own domestic law enforcement or regulatory action against companies as a matter of going after corruption are money-laundering. i don't need them to get out in

problem it will have a politically looking like they are capitulating to u.s. from texas, mr. green. >> thank you. thank you for the witnesses appearing as well. we've had many duties related to adverse circumstances we encountered related to bad weather and that is putting it mildly. attracted myhave attention so forgive me for not being here for the whole hearing. i am concerned about the sanctions. i do have some questions that have probably already been

posed, so please forgive me for being redundant or superfluous. if we can perfect the sanctions as codified, what would be the then, on china first and i would like to move to the secondary portion of the question which relates to the impact on north korea. on china. what would be the impact if we would perfect the sanctions as codified? i leave this to whomever would like to respond initially. -- thank you for the question -- i think a way to perfect or improve upon the sanctions that exist, and they are extensive and powerful, is to go after them with an aggressive sense of strategy. that may not include secondary

theby making an example of sanctions and calling out the companies and china, certainly northarica but also -- others.t certainly economic activity. that is a strong and important way to improve upon sanctions of occasions.more >> thank you. the efficacy of the sanctions, which you care? >> i would take a step back. an impact on chinese and north korean companies, but i think as dr. albright noted, china has been a problem for a long time in terms of iran, north korea. unsuccessful goals could be that chinese finally realizes just -- a successful goal could be that chinese finally realizes that just presenting a list is not enough. they need to do more engaging

their companies, gauging their banks. and law enforcement actions, inspections of the border, authorizing other countries to do those inspections. of waysese are in a lot the center of a market and it is the market for proliferators and that is a problem. until they realize they have to change their ways we are unfortunately not going to be successful. >> let me follow up. if we perfect the sanctions proposed in their entirety, what will be the impact on north korea? >> one impact would be their gas centrifuge program which makes weapons with uranium would probably stop at some point. it may take a year or two but they do depend on what we would consider perishable goods in order to operate that plan and they do not make those goods.

if we had a perfect set of sanctions, think you could cause serious damage to the progress of their nuclear program. we could not stop a daily help but you could stop more. please do not assume i have a position based on the questions i am posing. i think these are some things i need to hear answers to. the next question has to do with china's position that if the sanctions create turmoil to the extent that north korea becomes a government that no longer exists for all practical purposes and people start to flood into china, they have always raised that as a possibility. is it possible the sanctions could create such a circumstance if completely implemented -- northorth carolina korea? would that create the breakdown in governance? >> i mean, that is chinese fear.

there has been some newer talk in anticipation of that, the people's army would occupy part of north korea in comingo block refugees into china and also to build housing. >> said the expectation is that --na would somehow feel feared north korea is such that people in north korea could migrate into china? >> there has been some discussion of that. it has been on the table but the returning.is china fears them. china fears the instability of north korea could create problems for itself and it worries about that and it worries about north korea's nuclear weapons. it is at the crux of the matter. that problemolve for china.

>> thank you mr. chair. i thank you, gentleman's time is expired. chernow recognizes the gentleman from ohio. >> thank you. i you. very briefly, the legislative proposal to impede north korea's access to finance that has been discussed her today. with the passage of this legislation or the mere introduction of a bill that directed treasury to impose these additional secondary sanctions, with that, in your secretarygive tillerson and ambassador haley additional leverage in their negotiations with geithner and with russia with three to north korea? recs i think that is right. when you look at the comprehensive rn sanctions into the domestic and active 2010, only to make sort designated. one in china, one may interact. -- one inge their

iraq. >> south korea has announced someplan to participate in decapitation exercises. this is kinetic, not financial presumptively. i'm cute curious as to -- i am curious as to what north korea's reaction to the rhetoric if not the deeds. >> one year ago, the south korean minister of defense of the previous administration announced they have a special forces unit whose mission is decapitation. he also emphasized they have surfaced to surface missiles. a week ago they demonstrated a practice attack using their f-15 kay's. they announced they would conduct such an attack if they detected signs that north korea was about to attack. pyongyang said they would preempt the preemption.

the risk concerned as of miscalculation by either korea or the u.s. and that we sort of stumbled across a redline and do some sort of kinetic military action based on very difficult to discern intelligence. >> thank you. i think that is accurate. i am curious. at some point, doesn't this make having a nuclear deterrent given their massively weaker military stature a rational choice for north korea to pursue? >> not really. nobody is planning to invade north korea. decapitation is a reaction to north korean strikes, some of which happened against south korea. the sinking of their ship i and north korean severing, the artillery attack where they did

not respond and they said, we will. i think these kind of actions have to be put into context but the background is, no one is planning. saddam had enemies. >> they don't have anyone who wants to invade them. >> i understand what our perspective and probability of north korea being low but i think if all the other side the border, they do not understand that, frankly. i think when we do our rotational efforts and they see division after the mission after division getting experienced in north korea, if i am a korean of looks like they are prepared to do that. to talk piece i want about is our naval power. differential in naval power there. of the $15 billion mighty north much isconomy, how dependent upon the is to the sea? anybody know?

>> the north korean naval forces and air forces are small and antiquated. they have given their focus in the past on ground forces and then as those conditions are deteriorated even in the 90's when i was at the cia, they compensated by declining conventional capabilities by focusing on asymmetric capabilities like nuclear weapons, missiles, special forces -- >> are they dependent for their oil? >> not exclusively. then the capacity to take tanker or delivery as well as pipeline china. >> the pipeline, but they do get a fear of bed. over thatnk or bridge, for example. >> tanker trucks. ok. -- >> in the tape ability to use

naval power, blockade, short force, control the ocean, is their ability to have a certain impact on north korean economy? i would imagine. you also have to consider the possibility of a submarine a ballistic missile. they are far from that, but you have to worry about their submarine force and i think that an answer to question is, certainly a number -- an embargo economy.ect their >> kinetic force. mr. chairman, my time is expired. i yield. >> i like to think our witnesses for their testimony. >> without objection, all have five additional days to submit questions to the witness for their response. i ask witnesses to please respond as quickly as able.

this hearing is adjourned. [gavel pound] [indiscernible conversation]

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>> sundays at 7:00 p.m. eastern history," a series of six interviews with prominent photojournalists. this sunday, frank johnston his photos and career. frank: when they brought oswald out, he was within three feet of me when jack ruby, who , between bobe jackson and i, fired the gun. we were all frozen to the floor because -- we were all flung to the floor because there must have been 100 policeman that morning. >> sundays at 7:00 p.m. eastern on american history tv on c-span3. republicanof senators have come out with their own health care proposal. it would end many of these subsidies in the affordable care act and creates a block grants

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